Mr Haines was abducted near the Atmeh refugee camp, adjoining the Turkish border in the northern Syrian province of Idlib, in March 2013, aid workers who have been involved in efforts to secure his release told the Washington Post.

As well as threatening Mr Haines, the masked man warned governments to back off "this evil alliance of America against the Islamic State".

In the video, Sotloff describes himself as "paying the price" for the Obama administration's air strikes on IS targets in Iraq.

The purported executioner seemed to be the same British-accented man who appeared in the video showing the killing of Foley, and it showed a similar desert setting. In both videos, the captives wore orange jumpsuits.

The masked man, addressing US President Obama, stands next to Sotloff saying: "I'm back, Obama, and I'm back because of your arrogant foreign policy towards the Islamic State."

He says Sotloff is being executed "because of your insistence on continuing your bombings and ... on Mosul Dam, despite our serious warnings".

"So just as your missiles continue to strike our people, our knife will continue to strike the necks of your people."

Some Western intelligence officials said they believed Sotloff may have been executed on the same day as Foley, but that the propagandists at Islamic State had decided to space out the release of the videos for publicity purposes.

However, the most recent video shows Sotloff with a small beard and some hair on his head, in contrast with the August 19 video, in which he is shown nearly bald and clean shaven. The contrast in his appearance suggests the videos were not taken at the same time.

In the video Islamic State released on August 19, it said Foley's death was in retaliation for US air strikes on its insurgents who have overrun wide areas of northern Iraq.

The United States resumed air strikes in Iraq in August for the first time since the end of the US occupation in 2011.

The raids followed major gains by Islamic State, which has declared an Islamic caliphate in areas it controls in Syria and Iraq.

The White House said it could not immediately confirm that Islamic State had released a video of Sotloff's beheading.

"We have seen a video that purports to be the murder of US citizen Steven Sotloff by the Islamic State of Iraq and the Levant. The intelligence community is working as quickly as possible to determine its authenticity," National Security Council spokesperson Bernadette Meehan said in a statement.

"If genuine, we are appalled by the brutal murder of an innocent American journalist and we express our deepest condolences to his family and friends. We will provide more information when it is available."

Video appears authentic

A source familiar with the matter said that, while US officials have yet to formally confirm the validity of the video, it appeared to be authentic.

Iraq's outgoing Foreign Minister Hoshiyar Zebari condemned what he called "this savage killing ... an example of savagery and evil" and said this was evidence of the need for Iraq and the West to defeat the Islamic State.

"We have a common enemy and the whole world is moving in the right direction to stop this savagery and brutality," Mr Zebari said. "The whole world is standing united against IS. They must be defeated so these horrid scenes will not be repeated."

Iraqi Shiite Muslim politician Sami Askari, who is close to outgoing Prime Minister Nuri al-Maliki, said: "They are trying to scare the Americans not to intervene. I don’t think Washington will be scared and stop ... This is evil. Every human being has to fight this phenomenon. Like cancer, there is no cure. You have to fight it."

British Prime Minister David Cameron condemned Sotloff's apparent decapitation as "an absolutely disgusting and despicable act". He was expected to make a fuller statement later in the day.

A person with ties to the Islamic State in Diyala province said the group had suffered badly in northern Iraq since US air strikes began last month, ahead of the filmed execution of Foley and the grisly video of the beheading of a Kurdish soldier.

"The defeat of the Islamic State in the battle of Mosul Dam contributed to a deflating of the morale of its fighters and the American strikes have also succeeded in restricting their field operations," the man, who spoke on condition of anonymity, said.

"The initiative is not with Islamic State any more, it’s with their enemy now."

The United States is taking the Islamic State insurgents far more seriously now than it did six months ago, when Mr Obama told the New Yorker magazine that they were the "JV team", which is short for "junior varsity" and means they are not the best players on the field.

On August 24, al-Qaeda-linked Nusra Front militants in Syria freed an American writer, Peter Theo Curtis, who had been missing since 2012, following what officials said were efforts by the Gulf Arab state of Qatar to secure his release.

3 Sep
“I’m back, Obama, and I’m back because of your arrogant foreign policy towards the Islamic State, because of your insistence on continuing your bombings,” says Steven Sotloff’s murderer into a video camera before he kills the young journalist.